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Trump's return to White House spurs bitcoin investment

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Biotech firms set up to $1 mln treasury reserve target

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Skeptics call out bitcoin's volatile nature

By Niket Nishant and Bhanvi Satija

Dec 4 (Reuters) - U.S. President-elect Donald Trump's

pro-crypto stance is prompting small businesses to allocate

portions of their cash to bitcoin, challenging the dominance of

traditional assets as companies look for more robust inflation

hedges.

Over the past month, biotech firms Enlivex Therapeutics

, Acurx Pharmaceuticals ( ACXP ) and Hoth Therapeutics ( HOTH )

have set a target of purchasing up to $1 million of

bitcoin to hold as a treasury reserve asset.

The moves underscore the growing appeal of bitcoin as a

legitimate tool for corporate treasurers, who see it as a better

alternative in a landscape fraught with economic uncertainty,

geopolitical risks and fiscal concerns that have complicated the

outlook for conventional assets like Treasuries and cash.

"The benefits of bitcoin being used as a treasury reserve

asset are obviously apparent. Inject bitcoin into a company and

now it's on its way into the top 100 company (by market value)

rankings," said Samson Mow, CEO of crypto infrastructure firm

JAN3.

Corporations held around 3.3% of the total supply of bitcoin

as of August, up 30% year over year, according to a report by

bitcoin-focused financial services firm River.

"The things that we've been going through in the last three

or four years were such that evaluating bitcoin as an additional

tool became a must," Enlivex CEO Oren Hershkovitz said.

"We were considering this regardless of Trump's election,

but it was definitely another argument in favor of executing

this strategy."

Once confined to the fringes, bitcoin has soared in

popularity in the last few years after endorsements from major

institutions. Trump's promise of a crypto-friendly

administration has grown its clout further.

"The next four years should be pretty good for crypto,"

Acurx CEO David Luci said.

The incoming president has said he wants to make the U.S.

the "crypto capital of the planet" and has promised a council to

advise on industry-related policy.

Still, skeptics say the volatility risks associated with

bitcoin, given its notorious price fluctuations, make it unfit

as an inflation hedge.

Securities and Exchange Commission Chair Gary Gensler has

called the asset speculative and volatile, even as the regulator

approved spot bitcoin exchange traded funds earlier this year.

The currency has also mirrored declines in the S&P 500 index

during periods of economic slowdown in the past, calling

into question its effectiveness.

But such criticism is "unfair," said Henry Robinson,

co-founder of crypto mining firm Decimal Digital Currency,

adding that "bitcoin is not uniquely volatile."

BALANCING HYPE WITH FOCUS

MicroStrategy ( MSTR ) , the largest corporate holder of

bitcoin, pioneered the approach of integrating bitcoin into its

treasury in 2020. Since then, the token's influence on the

company's stock price has been significant, with shares often

moving in lockstep with the overall crypto sentiment.

But recent adopters of bitcoin have emphasized that they do

not plan on becoming a proxy for the currency and will continue

focusing on their core business.

"We're a biotech company. We focus on developing our

clinical assets. What I know how to do at the end of the day is

to take a drug from pre-clinical to clinical to approval,"

Enlivex's Hershkovitz said, referring to the different stages of

testing an experimental treatment.

Analysts say companies could explore ways to monetize their

bitcoin holdings without selling them, should they need capital,

by using the currency reserves as collateral to secure loans,

either from banks or investors.

"Lending against crypto is totally normal and the collateral

is safe," Decimal Digital's Robinson said.

The hype around bitcoin may also drive stock valuations

higher, giving such companies added leverage to sell shares for

their capital needs. MicroStrategy ( MSTR ) shares have jumped over

31-fold since it made bitcoin its primary treasury reserve

asset.

"The balance sheets of these companies will be more

attractive to the public," said Brandon Mintz, CEO of Bitcoin

Depot ( BTM ) , which began investing a portion of its cash into

the crypto in June.

MicroStrategy ( MSTR ) and Hoth did not immediately respond to a

request for comment.

(Reporting by Niket Nishant and Bhanvi Satija in Bengaluru;

Editing by Anil D'Silva)